Idea in Brief

The Problem

Many organizations expect consistency from their professional employees. However, human judgment is often influenced by such irrelevant factors as the weather and the last case seen. More important, decisions often vary from employee to employee. The chance variability of judgments is called noise, and it is surprisingly costly to companies.

The Starting Point

Managers should perform a noise audit in which members of a unit, working independently, evaluate a common set of cases. The degree to which their decisions vary is the measure of noise. It will often be dramatically higher than executives anticipate.

The Solution

The most radical solution to a severe noise problem is to replace human judgment with algorithms. Algorithms are not difficult to construct—but often they’re politically or operationally infeasible. In such instances, companies should establish procedures to help professionals achieve greater consistency.

At a global financial services firm we worked with, a longtime customer accidentally submitted the same application file to two offices. Though the employees who reviewed the file were supposed to follow the same guidelines—and thus arrive at similar outcomes—the separate offices returned very different quotes. Taken aback, the customer gave the business to a competitor. From the point of view of the firm, employees in the same role should have been interchangeable, but in this case they were not. Unfortunately, this is a common problem.

A version of this article appeared in the October 2016 issue (pp.36–43) of Harvard Business Review.